Pablo was reviewing the water bill for his carwash business and determined that the highest bill, $5,400, occurred in July when 2,700 cars were washed and the lowest bill, $3,100, occurred in February when 1,500 cars were washed. What was the variable cost per carwash?

Question

Bird

Business

18 February, 12:51

Pablo was reviewing the water bill for his carwash business and determined that the highest bill, $5,400, occurred in July when 2,700 cars were washed and the lowest bill, $3,100, occurred in February when 1,500 cars were washed. What was the variable cost per carwash?

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Answers (1)

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Adrian Mccall · Answer 1

Variable cost per unit = $1.92 per car wash

Explanation:

Giving the following information:

$5,400, occurred in July when 2,700 cars were washed and the lowest bill, $3,100, occurred in February when 1,500 cars were washed.

To determine the variable cost, we need to use the high-low method:

Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units)

Variable cost per unit = (5,400 - 3,100) / (2,700 - 1,500) = $1.92 per car wash